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F I S C A L I M P A C T R E P O R T

SPONSOR Fox-Young

DATE TYPED 1/31/05

HB 290

SHORT TITLE Tobacco Settlement Fund Distribution Changes

SB

ANALYST Taylor

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

($34,800.0) ($34,100.0)

Similar

Recurring

General Fund

$17,400.0

$17,050.0

Similar

Recurring Tobacco Settlement

Permanent Fund

$17,400.0

$17,050.0

Similar

Recurring Tobacco Settlement

Program Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Department of Finance and Administration (DFA)

SUMMARY

House Bill 290 eliminates the distribution from the tobacco settlement permanent fund to the

general fund. The bill also eliminates the tobacco settlement permanent fund from serving as a

general fund reserve fund. The bill carries an emergency clause, making the bill effective upon

approval by the governor.

Current law distributes money distributed to tobacco settlement fund to the general fund through

FY 2006; FY 2007 and thereafter 50 percent of the revenue is distributed to the tobacco settle-

ment fund program fund until that distribution is equal to 4.7 percent of average value of the

fund in the proceeding five-years. Current law also has the permanent fund serve as the general

fund reserve fund of last resort, which may be called upon only in the amounts necessary to meet

appropriations for a fiscal year and only after all authorized transfers are made from other re-

serve funds: general fund operating reserve fund, appropriation contingency fund, and the tax

stabilization reserve fund.

House Bill 290 -- Page 2

FISCAL IMPLICATIONS

This bill effectively pushes forward the end of tobacco settlement revenue as a general fund

revenue source from FY07 to FY05. Although the bill provides that revenues distributed in

FY05 to the General Fund in FY05 prior to the effective date would remain with the general

fund, all tobacco settlement revenue would be transferred from the general fund in FY05 because

all tobacco settlement revenue is transferred in the last month of the fiscal year. The revenue

impacts shown thus reflect general fund revenue estimated amounts, which are transferred from

the general fund to the tobacco settlement program fund and tobacco settlement reserve fund.

Eliminating the tobacco settlement permanent fund as a general fund reserve fund has the effect

of reducing general fund reserves by approximately $76 million in FY05 and by $83 million in

FY06.

BT/lg:yr